Supply Chain Security: 10 Best Practices

Don Hill, CFI, manages the Loss Prevention and Risk Management Departments at Americold Logistics in Atlanta, the third party logistics provider for the Kroger supply chain in Georgia, Alabama, Tennessee, and South Carolina. He has more than 20 years experience in retail & risk management, LP and investigations.

As we try to trim operational costs to improve margins, the supply chain is often an area where a significant impact can be made in reducing costs and operational losses with minor tweaks to the overall security plan. Many of the basic principles that apply to the retail store environment apply to the supply chain. The difference in the supply chain is your risks are not limited to the distribution center or one location — they must be applied to the entire fleet of drivers and every location in the supply chain. Here are 10 best practices to enhance supply chain security:

1. “Sift the sand for diamonds.” When screening applicants and evaluating current talent, I had a partner who would say, “You have to sift the sand for diamonds” — meaning you should take your time to find the right person. Sometimes, the pressure to get someone hired puts the organization at risk because they hire a body, not the right person. We can also fall into the trap of keeping someone who is not right for the job to avoid digging for that right person. Additionally, be sure to check your screening procedures — from background check standards to drug testing. Tighter screening controls will mean you have a better applicant base to choose from. Cutting corners just to get a body in an empty position will cost more in the long run.

2. Train early and often. Distribution center associates and fleet drivers need to be reminded they are part of the solution to drive shrink reduction and operational improvement. Security training should start from the moment a new person is hired and continue frequently throughout their career. Drivers should be clear on your expectations at orientation — they should hear about many of the ways they are checked and should believe they are being watched even while they are on the road, whether you have that capability or not. It also helps to keep your security message attractive. Classroom training works but can be boring; however, visually entertaining methods such as videos, interactive computer training sessions and text message blasts can improve retention and compliance.

3. Use tip lines. Associates are often afraid to come forward with information concerning theft or safety-related issues due to fears of retribution or being identified as the source of the information. Drivers are often overlooked as a source for supply chain information. There are many third-party organizations that are available to provide tip line services. Many have both telephone and internet options, and most operate 24 hours per day and have translation services.

4. Network, network, network. If you are getting the news from your local TV station or the newspaper, you are missing out on critical information that can harm your supply chain. There are often neighborhood business associations, Loss Prevention-Law Enforcement partnerships, and internet networks that can be used to collect valuable information on what is going on in your area. With Organized Retail Crime (ORC) and cargo theft on the rise, you should use every method possible to connect with peers to work together to address crime.

5. Don’t be afraid to try new things. New technology can go a long way to spread the security budget and provide results. In the last few years, GPS devices have improved to enable the tracking of shipments or even single cases. Fleet managers can now track truck routes, check driver speeds and driving behaviors, and be alerted to safety issues with the touch of a button remotely.

6. Old school still works. Old methods of investigating issues still work. Following a delivery from the warehouse can reveal safety issues that can result in major claim losses and detect theft potential. Meeting the driver at the destination and checking the delivery can reinforce your security measures and send the message that they can be checked anywhere.

7. Moving cargo is safe cargo. Drivers should be routed so that there are minimal stops and in the shortest distances possible. Reduce overnight stays and limit them to secured lots. Truck stops are notorious for cargo theft so get to know the hot spots and educate your fleet on their locations.

8. Be visible. A full trailer of cargo can represent a potential loss of $100K-$500K if the product is food or electronics — the top two items stolen nationally, according to Freight Watch. Cargo thieves love trailers with minimal markings. A trailer with small or no markings can be repainted quickly after being stolen and be back on the road in no time. Trailers with full side markings and markings on the roof are harder to cover, and roof markings can be tracked from the air by law enforcement to speed recovery of stolen trailers.

9. E-bay can be your friend. Many warehouse items and items stolen from trailers are sold on eBay, Craigslist and other electronic auction sites. eBay has become an ally to asset protection with its PROACT program partnering with retailers to fight fraudulent auctions and license infringement. They can help by tracking payment information through Paypal to help you build more solid cases.

10. Trust but verify. Vendors are often overlooked as a potential for loss. We trust our business partners to operate in an ethical way to take care of our needs, but vendors in the supply chain can cause losses in a variety of ways. Incoming shipments can have vacant spaces in the center of pallets where product is missing but not visible. Those pallets then get charged as if they were full of product and not discovered until it is picked for delivery. Other vendors cause losses due to over-billing, fraudulent bills, or collusion with warehouse associates.

Don Hill, CFI, manages the Loss Prevention and Risk Management Departments at Americold Logistics in Atlanta, the third party logistics provider for the Kroger supply chain in Georgia, Alabama, Tennessee, and South Carolina. He has more than 20 years experience in retail & risk management, LP and investigations.